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Report: Trends in the Prime Brokerage Industry

Sep 19, 2013
Jing Chen

A new report from Ernst & Young indicates that the prime brokerage industry is under pressure to respond to the shifting landscape of the hedge fund industry.

According to EY’s 2012/2013 prime brokerage survey report, prime brokers can potentially gain advantages by introducing better technology into the onboarding process. Less than half (44%) of firms surveyed say they use a semi-automated process for capturing data and tracking onboarding progress and completion, and none of the firms surveyed have a tool that configures and integrates all prime brokerage systems with client information and unique business requirements.

The survey also shows that liquidity management is an area that most prime brokers can improve on. 71% of prime brokers revealed that they do have an official method of notifying their treasury group of large cash flows. The remaining 29% said that they use e-mails and phone calls to inform treasury.

Arthur Tully, co-leader of EY's Global Hedge Funds services, explains “the survey reinforces the need for brokers to develop ways to better integrate their systems with client's information and enhance their ability to quantify associated operational costs."

An undisclosed number of executives from eight prime brokers were surveyed for this year’s report. EY offers assurance, tax, transaction and advisory services.




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